Business activity in the Eurozone showed modest growth in January, according to the latest report by S&P Global and Hamburg Commercial Bank (HCOB). The composite Purchasing Managers’ Index (PMI) rose to 50.2, up from 49.6 in December, signaling marginal expansion in the region’s private sector.
At 50.2, the January PMI reading is the first in months to cross the 50-point mark, the level that distinguishes expansion from contraction. Despite this modest upturn, analysts caution against over-optimism. Concerns also remain as the services sector outlook softened, with the Service PMI coming in at 51.3 last month, just below December’s 51.6.
Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, highlighted concerns over the services sector, stating: “The services outlook is modest. The index for business expectations fell slightly and has been below the historical average since mid-2024. Given the many political uncertainties, particularly the new elections in Germany and the fragile government in France, this isn’t surprising. No major growth leaps are expected in this sector for now.
lnflationary pressures persisted in January, with service sector operating costs rising at the fastest pace in nine months. However, selling price inflation remained steady, unchanged from December’s peak—the highest since May 2024
The eurozone economy continues to face headwinds from geopolitical tensions, high interest rates, and sluggish consumer demand. Political instability in key economies such as Germany and France has further dampened confidence, making businesses cautious about investment and expansion.
Despite the PMI’s slight uptick, the lack of strong momentum suggests the Eurozone economy is still navigating uncertain terrain. Monetary policy decisions by the European Central Bank (ECB) and upcoming political developments will be key factors shaping economic trends in the months ahead.
The HCOB Eurozone Composite PMI is compiled by S&P Global from responses to questionnaires sent to survey panels of manufacturers in Germany, France, Italy, Spain, the Netherlands, Austria, Ireland and Greece, and of service providers in Germany, France, Italy, Spain and Ireland, totalling around 5,000 private sector companies.
